A certain foreign exchange reserve is an important means for a country to adjust its economy and achieve internal and external balance. When the balance of payments is in deficit, the use of foreign exchange reserves can promote the balance of payments; When the domestic macro-economy is unbalanced and the total demand exceeds the total supply, foreign exchange can be used to organize imports, thus adjusting the relationship between total supply and total demand and promoting macroeconomic balance. At the same time, when the exchange rate fluctuates, foreign exchange reserves can be used to intervene in the exchange rate to stabilize the exchange rate. Therefore, foreign exchange reserves are an indispensable means to achieve economic balance and stability, especially when economic globalization is developing and one country's economy is more susceptible to the influence of other countries' economies.
Generally speaking, increasing foreign exchange reserves can not only enhance macro-control ability, but also help to maintain the international reputation of countries and enterprises, expand international trade, attract foreign investment, reduce the financing cost of domestic enterprises, and prevent and resolve international financial risks. Of course, this does not mean that the more foreign exchange reserves, the better, because holding foreign exchange reserves has a price. First, foreign exchange reserves are characterized by holding a financial creditor's right expressed in foreign currency, rather than putting it into domestic production and use. This leads to the problem of opportunity cost, that is, if the monetary authorities do not hold reserves, they can use these reserve assets to import goods and services and increase the actual resources for production, thus increasing employment and national income, while holding reserves will give up this interest. Therefore, holding foreign exchange reserves should consider the opportunity cost. Second, the increase in foreign exchange reserves should correspondingly expand the money supply. If there are too many foreign exchange reserves, it will increase the pressure of inflation and increase the difficulty of monetary policy. In addition, holding too much foreign exchange reserves may also suffer losses due to the depreciation of foreign exchange rates. Therefore, foreign exchange reserves should be maintained at a moderate level.
The appropriate level of foreign exchange reserves depends on many factors, such as import and export, the scale of foreign debt, and the actual utilization of foreign capital. Foreign exchange reserves should be kept at a moderate level according to the comparison of income and cost and these conditions.
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Is China's foreign exchange reserve too large or too small? Officials and scholars talk about advantages and disadvantages
[ 2004-03-05 14:00 ]
China Journal website news: From 1993 to 2003, China's foreign exchange reserves increased from 21200 million US dollars to 403.3 billion US dollars, an increase of nearly 20 times in 10. Last year alone, China's newly-increased foreign exchange reserves, including $45 billion injected into China Bank and China Construction Bank, exceeded $654.38+060 billion, equivalent to the accumulation of 6543.8+0999 in the 50 years since the founding of the People's Republic of China.
Adequate foreign exchange reserves will undoubtedly help to resist financial risks. From this perspective, it is the "Great Wall" to defend China's financial industry. However, more and more experts and scholars have noticed that things are not so simple.
$400 billion is a high-frequency figure in the dialogue between CPPCC members and journalists these two days. Everyone is trying to solve a problem: Is the $400 billion foreign exchange reserve too much or too little for China?
Guo Shuqing, member of the Chinese People's Political Consultative Conference (CPPCC) and director of the State Administration of Foreign Exchange (SAFE), said that whether there are too many foreign exchange reserves cannot be generalized from figures. A country's foreign exchange reserves will consider whether there is a serious adverse situation to the national economic security. If there is a Southeast Asian financial crisis like 1997, without sufficient foreign exchange reserves, the country will be very difficult. From the perspective of resisting risks, it is not enough to simply say how much foreign exchange reserves a country has. Guo Shuqing compares ensuring sufficient foreign exchange reserves to "building fire prevention". A building may never catch fire, but the task of fire prevention should always be kept in mind.
Indeed, foreign exchange reserves are a symbol of national strength. Lack of foreign exchange reserves will not only affect import and export, but also affect the introduction of foreign capital and borrowing. Moreover, China has a huge population base, and its foreign exchange reserves of US$ 400 billion reach everyone on average, so there is really no need to worry too much.
However, some representatives and members of NPC and CPPCC expressed concern about the current foreign exchange reserves.
Yin Jizuo, a deputy to the National People's Congress, submitted a proposal on foreign exchange reserves to the Second Session of the Tenth National People's Congress. He told reporters that the huge foreign exchange reserves constitute a high-cost and inefficient resource occupation, leading to an imbalance in the economic structure. He said that at present, China's foreign exchange reserves have exceeded the international warning line. Although these early warning indicators are not absolutely reliable, if foreign exchange reserves still maintain an average annual growth rate of around 1990 by 2003, it will obviously do more harm than good.
Deputy Yin Jizuo used data to illustrate this view in the motion. Internationally, foreign exchange reserves are usually used as three important indicators to measure the level of foreign exchange reserves: foreign exchange reserves support foreign trade imports, foreign exchange reserves pay foreign debts and the proportion of foreign exchange reserves in GDP. Taking this as a reference, according to the three-month import volume, China needs about 60 billion US dollars in foreign exchange reserves; Based on 15% foreign debt reserve, it will cost about $30 billion, plus 2.4% GDP, it will cost about $20 billion. On the whole, China's ideal foreign exchange reserves are about 1 1000 billion US dollars. Therefore, the current foreign exchange reserves are much higher than the "optimal scale".
Yin Jizuo's suggestion is to establish the concept of rational management of foreign exchange reserves on the premise of formulating relevant laws and regulations, and at the same time formulate the adjustment plan of foreign exchange reserves, improve the operating mechanism and realize the effective management of foreign exchange reserves. (